Foreword

The Reason of Rules, by Geoffrey Brennan and James M. Buchanan, is a book-length attempt to focus the energies of economists and other social analysts on the nature and function of the rules under which ordinary political life and market life function.*1 The argument is that modern economics seems mired in either explaining the obvious or overmathematizing the trivial. The message of this book is that such efforts are misguided and that analysts’ time would be much better spent on the problem of how rules can be devised and improved upon so that the ordinary life of an economy can proceed with a minimum of social dilemma ingredients. In other words, there is more than one way to get out of the jungle; can we develop any positive and normative theories of what the “best” way might be?

Harkening back to classical economics, Brennan and Buchanan stress that this consideration of rules is not really a new problem for economic analysis, and they point out that applying the analytical rigor of modern economics to rules and their selection is not an entirely new intellectual enterprise. The foundation stones have barely, if at all, been laid in this work, and this book is as good a source as any in all of Buchanan’s work for capturing the essence of his vision of constitutional political economy.

There are, of course, other sources of this approach contained in various papers and books in this collection of Buchanan’s works. The basic idea of the importance of rules dates to at leastThe Calculus of Consent and threads its way through Buchanan’s work to this very day.*2 More than anything else, Buchanan’s basic insight that rules are important can be said to have driven most of his written work over his career. More than any other single scholar, he is responsible for this emphasis and its emergence in modern economics and political science.

The Reason of Rules reflects an attempt to erect some methodological and analytical substance around this basic idea of rules. Perhaps it reflects a turning point in economics in that this book foreshadows the work of future constitutional theorists. It is hard to be sure about this because the problem that Buchanan assigns himself is so hard. However, the inherent difficulty of the problem reflects the stature of Buchanan the man and scholar. Better to build a base camp so that others can ultimately scale the highest mountain than to climb a nearby hill.

Robert D. Tollison

University of Mississippi1998

Geoffrey Brennan

As we noted in the preface,The Reason of Rules is a response to critics ofThe Power to Tax, also jointly authored with Geoffrey Brennan. In an analytical sense, Brennan and I were essentially clones of each other in the whole enterprise. We shared the same reactions to the criticisms of those who seemed simply to misunderstand our whole purpose in the earlier book.

We had planned to write a third book, which we were to callThe Power to Transfer. This book has not been, and will not be, written. The basic analysis proved to be much more difficult than we had anticipated, and, also, Geoffrey Brennan returned to Australian National University in 1983.

Geoffrey Brennan probably knows how I think better than any other coauthor. For me, it is good that he serves as coeditor of the Collected Works.

James M. Buchanan

Fairfax, Virginia1998

Preface

Anglo-American jurisprudence emphasizes the rule of reason; it grossly neglects the reason of rules. We play socioeconomic-legal-political games that can be described empirically only by their rules. But most of us play withoutan understanding or appreciation of the rules, how they came into being, how they are enforced, how they can be changed, and, most important, how they can be normatively evaluated. Basic “constitutional illiteracy” extends to and includes both the learned and the lay. We note with a mixture of admiration and envy those clever strategists who manipulate existing rules to their own advantage. It is these persons in the role of spivs rather than the sages that all too many emulate. Intelligence abounds, but wisdom seems increasingly scarce.

Our hypothesis is corroborated by the veneration Americans accord their Founding Fathers. James Madison, Benjamin Franklin, Thomas Jefferson, and their peers are distinguished by their essential understanding of the reason of rules in political order, an understanding they implanted in the constitutional documents, the “sacred” texts that have, indeed, worked their influence through two centuries. The wisdom and understanding of the Founders have been seriously eroded in our time. The deterioration of the social-intellectual-philosophical capital of Western civil order is now widely, if only intuitively, sensed.

At the most fundamental level, rules find their reason in the never-ending desire of people to live together in peace and harmony, without the continuing Hobbesian war of each against all. How can social order be established and preserved? All social science and philosophy must address this question, either directly or indirectly.

In part, the relative neglect of the question in its explicit form stems from the absence of a clearly defined answer. When we recognize that man’s natural proclivity is to pursue his own interests and that different persons’ interests almost inevitably come into conflict, it is all too easy to despair. Any social order seems to rest on extremely fragile foundations. Must life tend to be either “nasty, brutish, and short” in anarchy or “nasty, brutish, and slavish” under Leviathan?

Two broadly defined escape routes have offered hope to scholars and citizens through the ages. One of them is man’s capacity for moral improvement. People may, in a time to be, come to love one another. Much energy has been expended in promoting this objective. The observed record of success is dubious, although we do not want here to judge such effort unworthy or unnecessary.

The second possible avenue of escape from the “social dilemma” does not require that people become “better” in some basic moral sense. This approach starts with the empirical realities of persons as they exist, moral warts and all. These realities, summarized somewhat unsatisfactorily in the catchall term “human nature,” limit the attainable states of social harmony. But even within such constraints, hope emerges for sustainable social order through the appropriate design, construction, and maintenance ofrules that set limits on the way in which each person is allowed to order his conduct toward others.

The notion that rules may substitute for morals has been familiar to economists and philosophers at least since Adam Smith. And, of course, the great intellectual discovery of the eighteenth century was the spontaneous order of the market, the discovery that within an appropriate structure of rules (“laws and institutions” in Adam Smith’s phraseology), individuals in following their own interests can further the interests of others. The result is the great network of social coordination—refined and extended to the boundaries of the division of labor—that even after centuries defies the imagination when evaluated as a cooperative enterprise. The cooperation of agents in a market, however, requires neither that such agents understand the structure nor that they transcend ordinary precepts of morality in their behavior. What it does require is an appropriate “constitutional context”—a proper structure of rules, along with some arrangements for their enforcement.

All of this was once the centerpiece of “political economy,” and even today economics textbooks retain vestiges of such principles. But at one time an economist was literally defined as a person who “knows how markets work,” with “work” being understood in terms of the coordination of individual behavior through the institutional structure. Since the early years of this century, however, professional economists have shifted their attention. They have become preoccupied with predicting the effects of exogenous changes on the observable and measurable aspects of market outcomes (price, wage rates, quantities, etc.) and with elaborating the logical implications of alternative assumptions (or alternative “models”). With this shift of attention, modern economists seem to have all but lost the earlier understanding, which was, perhaps, their primary raison d’être in any “social” sense.

In public-choice theory, which applies the techniques and analytic apparatus of modern economics to the study of political processes, a similar divergence in emphasis is distinguishable. Some modern scholars view public-choice theory as offering a “pure science” of politics that is fully analogous to the “science” of markets. The objective is to derive testable hypotheses about the effects of specified changes in basic parameters on observed political results. Still other public-choice (social-choice) theorists concern themselves with analytic esoterica in the modeling of alternative political arrangements. The third strand of research activity within public choice, and the strand with which we have been personally most involved, has more in common with the earlier tradition in “political economy.” The objective here is to understand the workings of alternative political institutions so that choices among such institutions (or structures of rules) can be more fully informed. We have called this research program “constitutional political economy,” both in our subtitle for this book and in other works. Broadly defined, the methodology of constitutional political economy is the subject matter of this book.

This research program is not new for either of us. We have, jointly, separately, and severally, in bits and pieces, here and there, made previous attempts to shore up constitutional understanding. Specifically, we have made some start at analyzing how rules of political order work, how such rules might be chosen, and how normative criteria for such choices might be established. We have also, particularly in works written in the early 1980s, attempted to analyze the basic logic of rules, to indicate why rules or institutions rather than outcomes should be the central focus of inquiry. As it turns out, this sort of analysis, which we had thought to be almost universally understood, has proved surprisingly controversial. Our experience in attempting to persuade others, both in the academy and beyond, to accept the results of analysis of the more sophisticated and complex questions of constitutional design has generated a developing conviction that the intellectual problem lies at the deepest level of the mental process. Without a shared “constitutional mentality,” without some initial common ground from which discourse can proceed, all argument on design comes to naught. Persons must be cognizant of thereason of rules before they can enter into dialogues devoted to questions concerning choices among rules.

Since we are ourselves professional economists, we have been particularly mystified by the reluctance of our profession to adopt what we have called the constitutional perspective. Economists in this century have been greatly concerned with “market failure,” which was the central focus of the theoretical welfare economists that dominated economic thought during the middle decades of the century. This market-failure emphasis extended to both micro- and macrolevels of analysis. Scholars working at either of these levels showed no reluctance in proffering advice to governments on detailed market correctives and macroeconomic management. In retrospect, post-public choice, it seems strange that these scholars so rarely showed a willingness to apply their analytic apparatus to institutions other than the market; they paid almost no attention to politics and political institutions. Once a policy recommendation seemed to have emerged from their market-failure analytics, there was no subsequent analysis aimed at proving that persons in their political roles, as either principals or agents, would somehow behave as the economists’ precepts dictated. Implicitly, economists seemed locked into the presumption that political authority is vested in a group of moral superpersons, whose behavior might be described by an appropriately constrained social welfare function. Initial cursory attempts by a few public-choice pioneers to inject a bit of practical realism into our models of individual behavior in politics were subjected to charges of ideological bias. The myth of the benign despot seems to have considerable staying power, a phenomenon that we examine specifically in Chapter 3.

In its most fundamental aspects, the difference between the constitutionalist and nonconstitutionalist perspectives involves a difference in man’s vision of himself as a conscious being interacting with others in a social order. Our interests are limited by our presupposition that persons must be evaluated as moral equals. In our research program, the constitutionalist perspective is necessarily contractarian, a point that is the subject matter of Chapter 2.

The discussion in this book can be divided into four parts. The first four chapters cover general issues in any analysis of rules. Chapter 1 makes the basic distinction between end states, or outcomes, emergent from behavior within rules and the rules themselves. We attempt to indicate why our emphasis on rules is important by introducing several independent justifications. As already noted, Chapter 2 discusses the properties of the normative stance usually labeled “contractarian.” As also noted, Chapter 3 embodies our attempt to understand the opposition to a constitutional approach. Chapter 4 is concerned with a methodological dimension of the distinction between in-period and constitutional choice—a widely overlooked dimension that brings our work more closely into line with that of the classical political economists. Specifically, we argue that the behavioral assumptions appropriate for an analysis of rules may be different from those relevant to making predictions about outcomes generated under well-defined rules.

Chapters 5 and 6 deal with the temporal dimension of choice in the private—as distinct from the collective—choice setting. The object is to show that individuals will rationally discount the future more heavily in the collective-choice context—a fact that provides a distinct reason for rules in collective-choice settings. The general abstract argument of Chapter 5 is developed in Chapter 6 by appeal to three modern examples. The analysis of “politics without rules” through these examples establishes general support for the earlier analytic argument.

Chapters 7 and 8 deal with the connection between rules and “justice,” variously construed. Chapter 7 offers an interpretation of the notion of justice that depends on the prior existence of rule-bound behavior. To the extent that justice is valued, justice so understood provides a reason for rules. In Chapter 8 we attend to the question of distributive justice. The focus is on the workings of “politics without rules” in the attempted implementation of a norm for distributive justice, as opposed to the more familiar discussion devoted to comparisons of alternative imaginable “distributions.”

The book concludes with Chapter 9, which stands apart from the rest of the discussion. We could properly be accused of naïveté if we failed to address the critical issue of implementation. Is constitutional change possible in democracy? Clearly,no, if there is widespread ignorance about the reason of rules. But even with some requisite constitutional wisdom, how can reform surmount identifiable self-interest? Cassandra looks over our shoulders here, but our whole effort, in this book and elsewhere, testifies to our faith that we can, as participants in the ongoing academic dialogue and ultimately as citizens,improve the rules of the game we play.

As noted, part of the motivation for our exercise in this book lies in the reaction our previous work encountered—among sympathizers and antagonists alike. Much of that reaction was based, we believe, on a major misunderstanding—a failure to grasp what we had attempted to do. Whether we have been more successful in the present effort only our readers can decide. The only point to be made here is that in writing this book, we have been more than usually dependent on our critics. In this connection, we should express particular gratitude to Richard Musgrave and Jules Coleman, who paid us the greatest possible academic compliment—that of taking our work seriously. Among our immediate colleagues, Dwight Lee contributed to some of the ideas expressed in the chapters on politics and time, and Loren Lomasky, always a stimulating presence, provided valued comments on earlier versions of Chapters 6 and 7. Viktor Vanberg’s comments on Chapter 1 helped us avoid ambiguities, and Dennis Mueller’s comments on Chapter 7 were helpful. Robert Tollison’s several notes helped us improve the whole manuscript.

This book, like its predecessor,The Power to Tax,* and many shorter works, is a genuinely joint product of both authors. The labor had to be divided, however, and first-draft responsibility parceled out. To Brennan fell the task of initially drafting Chapters 1, 4, 7, and 8; to Buchanan the remainder, Chapters 2, 3, 5, 6, and 9. Some of the material in Buchanan’s chapters in particular was originally presented in lectures at Liberty Fund conferences at Snowbird, Utah, in 1981 and at Oxford, England, in 1982.

We have been assisted in our efforts directly by the Center for Study of Public Choice, George Mason University, and indirectly by those who have generously supported the center’s program. For the more inclusive project on “constitutional political economy” of which this book is only a part, we gratefully acknowledge the specific support of the Foundation for Research in Economics and Education, Los Angeles.

In the emerging Buchanan tradition, we must once again thank Betty Tillman for putting the package together. Her effort was more than usually noble, since it occurred in the wake of a major move that involved the entire Public Choice Center, a move she orchestrated virtually unaided. Her extraordinary dedication and unfailing cheerfulness, which have been characteristic for more than two decades, have continually surprised us and merit our continuing gratitude.

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